The impact of e-commerce on gross value of output in Iranian manufacturing SMEs

Purpose: This paper determines the impact of e-commerce (EC) on output of Iranian manufacturing SMEs through analyzing and calculating interrelated issues.

Design/methodology/approach: The model is based on both econometrics and the growth accounting approach to fill the gaps of previous studies. The first step of this research fills the gap of the growth accounting approach by transforming the model into a parametric model and providing statistical analysis. The second step closes the gap of the econometric estimation of the Cobb-Douglas production function by calculating productivity indicators. This research applies extensive growth theory, which is based on the expansion of the quantity of inputs in order to increase the quantity of output. The model has six EC measurements: the number of employees using a computer; the number of employees using the internet; using the internet to gather information; using the internet to offer information; e-buying; and e-selling, and uses two years panel data.

Findings: The results showed that the impacts of EC on SMEs output using three EC measures—e-selling, using the internet to offer information and the number of employees using the internet—was positive and significant. So SMEs using the internet for selling electronically, using the internet to offer information and the number of employees using the internet have higher GVO (Gross Value of Output) on average, with significant technological progress. SMEs can raise their GVO by using EC.

Originality/value: The findings analyzed in this paper are consistent with underlying modified extensive growth theory.